Scott, Denis James (2025) A proof of concept of a project bank account (PBA) blockchain payment application for the construction industry. PhD thesis, University College London, UK.
Abstract
In 2012, the UK Government created a goal to use project bank accounts (PBAs) to deliver £4 billion worth of public-sector projects by 2015. The ambition of this goal was to restrict main contractors from exercising cash farming and to mitigate the risk of government money being lost when main contractors become insolvent (i.e., when a PBA is used, a project’s cash is partitioned from the main contractor’s business account; therefore, if the main contractor files for bankruptcy, the project’s cash is protected). Cash farming is a strategy contractors use to increase their working capital to invest in large-scale projects, which involves withholding supply chain liabilities. However, this withholding of cash comes at the cost of subcontractors enduring unethical working practices, such as prolonged overdue payments that lead to high levels of insolvencies. This thesis explores the cash flow problem from the technology perspective, particularly whether the programmability of smart contracts and the general-purpose protocol layer of the blockchain (BC) can be used to increase systems integration cash flow automation. This research proposes a PBA BC application and tests its hypothesis through proof of concept. Data is collected from two groups of study participants: (1) construction practitioners with working experience of PBAs and (2) blockchain engineers with technical expertise in BC to validate the proposal from the organisational and technical perspective. The author’s PhD studentship was sponsored by a UK main contractor that uses PBAs in most of the construction projects they deliver. Furthermore, this contractor was interested in exploring blockchain as a potential solution to improve their business performance. Therefore, the researcher leveraged the opportunity of extracting construction company insight by engaging in a knowledge-transfer study, by pulling information from industry and presenting it in this thesis. The findings of this thesis suggest: (1) blockchain (BC) and smart contract (SCs) can reduce the management workload of processing PBAs in the current climate; (2) BC and SCs include the potential to democratise PBAs across a broader percentage of supply chain tiers, (3) a BC-based PBA can be set-up within a day (as opposed to weeks using normal banking procedures), and finally, (4) BC provides a trusted data layer for improving the granularity and traceability of cash flow in payment performance reports.
| Item Type: | Thesis (Doctoral) |
|---|---|
| Thesis advisor: | Broyd, Tim and Ma, Ling |
| Uncontrolled Keywords: | UK; automation; banking; blockchain; business performance; government; integration; payment |
| Index terms: | automation, bankruptcy, construction industry, smart contract, blockchain, main contractor, working practice, engineer, construction project, integration, business performance, project bank accounts, subcontractor, cash flow, proposal, insolvency, liability, traceability, strategy, workload, construction practitioner, banking, construction company |
| Subjects: | professional development, management, financial management, performance measurement, industry analysis, organizational analysis, payment, computing systems, profession, supplier oversight, automation and robotics, production management, liability law, practitioner, organization, project planning, economic analysis, digital technology |
| Topics: | Legal Issues, Quality Management, Supply Chain Management, Project Management, Organizational Design, Contract Administration, Digital Applications, Human Resources, Roles and Professions, Cost Management, Business Strategy, Research Practice, Information Management |
| Descriptive scope: | 3 PCT |
N.B. Descriptive scope is a count of how many of the five facets of empirical research are indicated by the words used in title, abstract and keywords. It is not intended as a judgement on the research; merely a count of the kind of word we would expect to indicate Phenomenon, Concepts, Theoretical framing, Empirical techniques, Analytical techniques. If all five are present, then a code of “5 PCTEA” will indicate this. If you feel the coding for this record is questionable, we welcome discussion around the terms we matched or the way we categorized them. The facet you would expect may not be coded, or a facet may be coded inappropriately. This can also bear on a larger question, of which facets should be treated as defining in construction management research. Please get in touch, and we will look at it. More details here